SEC Sues Gryphon
Securities regulators are suing Gryphon Partners, accusing the $265 million Dallas hedge fund of engaging in an "illegal trading scheme" in conjunction with three dozen small-cap private stock placements.
The securities fraud charges against Gryphon, led by Edwin "Bucky" Lyon IV, arise from a more than two-year-old investigation into allegations of manipulative trading in the $22 billion-a-year market for PIPEs, or private investments in public equity.
The Securities and Exchange Commission, in a civil lawsuit filed Tuesday in New York federal court, allege Gryphon and Lyon "realized more than $6.5 million in ill-gotten gains" from 2001 through 2004.
Regulators allege Gryphon illegally shorted shares of at least 35 companies that sold discounted stock in PIPEs, a type of financing favored by small-cap companies in desperate need of cash. The SEC contends Gryphon "employed a variety of deceptive trading techniques" and misappropriated inside information to carry out its scheme.An attorney for Gryphon could not immediately be reached for comment. A short sale is a market bet that stock will decline in price. It's common for shares of a company doing a PIPE to decline after a deal is announced as investors adjust to a flood of discounted stock hitting the market. It's legal for investors in a PIPE deal to short a stock after the transaction is announced. But it's generally illegal to do so before the deal closes and is made public.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV